Rock Band 2 Sales Have 'Slowed Significantly' – UBS

With Activision's Guitar Hero World Tour having launched this past week and MTV's Rock Band 2 on store shelves since September (for Xbox 360), the "battle of the bands" this holiday is starting to heat up. According to UBS analyst Ben Schachter, however, sales for Rock Band have already slowed.

Weighing in on EA following the publisher's Q2 report, Schachter noted that EA's comments on Rock Band's market performance don't seem to match up with his own retail channel checks. "While ERTS stated that Rock Band continues to perform above expectations, our channel checks indicate that there is quite a bit of somewhat stagnant Rock Band inventory already in the channel," he said.

Moreover, regarding the newest Rock Band, Schachter said "our own internal checks [indicate] that Rock Band 2 sales have slowed significantly [and] make us wonder how/why the company did not take the opportunity to lower its revenue forecast." Rock Band 2 shipped more recently (Oct. 19) for PS3 and it won't hit Wii and PS2 until December.

Schachter also called into question the music genre's sales momentum given the weak economic environment. "As for the music genre, ERTS indicated that Rock Band is performing well, but we have our doubts. We will continue to track Rock Band and Guitar Hero closely in the coming weeks, but our initial take is that the genre is doing okay, but that it needs to pick up in order to not disappoint.," he said.

Overall, Schachter is not expecting much from EA's stock this year: "...we remain concerned that the company may have put itself at risk for missing its forecast for the all-important holiday quarter. We remain cautious on the stock in the near-to-intermediate term, as investors are likely to be disappointed with the EPS guidance and concerned about management's ability to deliver against plan."